March 25, 2022
EUR/USD: The euro weakened against the dollar as U.S. employment data helped bolster expectations that the U.S. Federal Reserve will take more aggressive steps to tackle inflation. Weekly initial jobless claims fell to a seasonally adjusted 187,000 last week, the lowest level since September 1969 and below the forecast of 212,000. Although new orders for durable goods unexpectedly declined in February as shipments slowed, demand for goods remains strong. The economic data and recent comments from Federal Reserve officials reinforced the view that the central bank will raise rates by more than 25 basis points at its next meeting in May. The U.S. 10-year Treasury yields remained inactive near the previous day’s close, around 2.37%, even as the latest Fed’s comments kept pushing for aggressive monetary policy normalization. It’s worth noting that a lower print of the U.S. Weekly Jobless Claims favors the market’s cautious optimism, coupled with the absence of major negatives from U.S. President Joe Biden’s European visit to convince leaders for more sanctions on Russia.
USD/JPY: The dollar steadied for the fifth session in a row against the yen on economic data on the U.S. labor market helped firm expectations that the Fed will be more aggressive in taking steps to curb inflation. Top Federal Reserve policymakers have all week signaled they stood ready to take more aggressive action to bring down decades-high inflation, including a possible half-percentage-point rate hike at the next policy meeting in May. Japan’s current account deficit is due more to rising raw material prices rather than the weak yen. The recent fall in the yen’s real effective rate reflects Japan’s low inflation compared to its trade partners. The Bank of Japan’s goal is to generate a positive cycle under which corporate profits, jobs, and wages rise together with a gradual increase in inflation.
XAU/USD: Gold remains on the front foot for the third consecutive day, taking the bids near $1,963 by the press time of Friday’s Asian session. The yellow metal rose to a fresh high in nearly two weeks the previous day amid escalating fears concerning the Ukraine-Russia war. The metal’s latest strength, however, could be linked to a pullback in the U.S. dollar. That being said, The U.S. Dollar Index (DXY) dropped 0.30% intraday to 98.50 while snapping a two-day uptrend by the press time. The greenback’s latest weakness could be linked to the sluggish yields in Asia and the market’s inflation fears, as well as indecision concerning Ukraine’s struggle with Russia.